Consumer Decision Making

Diffusion of innovations

The acceptance of new products and

services.
The frame work of exploring consumer
acceptance of new products is drawn
from the area of the research known as
the diffusion of innovation.
 Diffusion Process And Adoption
Process
Diffusion is a macro process concerned with the
spread of a new product (an innovation) from its
source to the consuming public.
OR
Diffusion is the process by which the acceptance of
an innovation (a new product/service/ideas
/practice) is spread by communication (mass
media, sales people) to member of social system (a
target market) over a period of time.
Adoption process is a micro
process that focuses on the stages
through which an individual
consumer passes when deciding to
accept or reject a new product.
Consumer innovators:
Those who are the first to purchase a new
product.
Success or failure of new product
introductions are major dependent upon the
identification of product innovators.
Examples: the policy of Gillette is that 40%
sales must come from product introduce
within the past 5 years
 Innovation
Firm oriented definitions:
the newness of a product from the
perspective of the company
producing/making it.
When the product is “new” to the company it is
considered new.
Whether or not the product is actually new to
the market place (i.e competitors or
consumers).
•
Product oriented definition:
A product oriented approach
focuses on the features inherent in
the product itself and on the effects
these features are likely to have on
consumers established usage
patterns.
• Market oriented definition:
judges the newness of a product in
terms of how much exposure
consumers have to the new products.
Consumer oriented definition:
Any product that a potential
consumer judges to be new i.e.
newness is based on the consumers
perception of the product rather on
physical features or market realities
 Level of consumer decision
making
Extensive problem solving:
Consumer have no established
criteria for evaluating a product
category or specific brands in that
category, their decision making efforts
can be classified as extensive
problems solving.
At this level the consumer need a
great deal of information to establish
a set of criteria on which to judge
specific brands and a
correspondingly large amount of
information concerning each of the
brands to be considered.
 Limited problem
solving
At this level of problem solving,
consumers already have established
the basic criteria of evaluating the
product category and the various
brands in the category.
However they have not fully
established preferences concerning a
select group of brands.
Their search for additional information
is more like “fine tuning”.
They must gather additional brand
information to discriminate among
the various brands.
 Routinized response behavior
Consumer have experience with the product
category and a well established set of
criteria with which to evaluate the brands
they are considering.
In some situations they may search for a
small amount of additional information.
In others they simply review what they
already know.
It implies little need for additional
information.
 Brands that a consumer
is indifferent toward
Inert Set because they are
perceived as having no
particular advantage.
Consumer Decision Rules

Compensatory
Noncompensatory
Conjunctive Decision Rule
Disjunctive Decision Rule
Lexicographic Rule
 A type of decision
rule in which a
consumer evaluates
Compensator each brand in terms
y Decision of each relevant
Rules attribute and then
selects the brand
with the highest
weighted score.
 A type of consumer
decision rule by which
Non- positive evaluation of
compensator a brand attribute does
y Decision not compensate for a
Rules negative evaluation of
the same brand on
some other attribute.
 A noncompensatory
decision rule in which
consumers establish a
minimally acceptable
Conjunctive cutoff point for each
Decision attribute evaluated.
Rule Brands that fall below
the cutoff point on any
one attribute are
eliminated from
further consideration.
 A noncompensatory
decision rule in which
consumers establish a
Disjunctive
minimally acceptable
Rule
cutoff point for each
relevant product
attribute.
 A noncompensatory
decision rule -
consumers first rank
product attributes in
Lexicographi
c Rule
terms of importance,
then compare brands
in terms of the
attribute considered
most important.
 A simplified decision
rule by which
consumers make a
Affect
product choice on the
Referral
basis of their previously
Decision
established overall
Rule
ratings of the brands
considered, rather than
on specific attributes.
Hypothetical Use of Popular Decision Rules in
Making a Decision to Purchase an Ultralight
Laptop
DECISION RULE MENTAL STATEMENT
Compensatory rule “I selected the computer that came out best when I
balanced the good ratings against the bad ratings.”

Conjunctive rule “I selected the computer that had no bad features.”

Disjunctive rule “I picked the computer that excelled in at least one

attribute.”
Lexicographic rule “I looked at the feature that was most important to me and
chose the computer that ranked highest on that attribute.”

Affect referral rule “I bought the brand with the highest overall rating.”
 Coping with Missing
Information
Delay decision until missing
information is obtained
Ignore missing information and use
available information
Change the decision strategy to one
that better accommodates for the
missing information
Infer the missing information
Types of Purchases

Trial Repeat
Purchases Purchases

Long-Term
Commitment
Purchases
 Outcomes of
Postpurchase Evaluation
Actual Performance Matches Expectations
Neutral Feeling
Actual Performance Exceeds Expectations
Positive Disconfirmation of Expectations
Performance is Below Expectations
Negative Disconfirmation of Expectations
Consumers Are Less Loyal -
Why?
Abundance of Commoditization
choice Insecurity
Availability of Time scarcity
information
Entitlement
Thank You!